Stone Energy Corporation Announces Third Quarter 2017 Results

Lease operating expenses ("LOE") during the third quarter of 2017 totaled approximately $11.8 million ($6.66 per Boe), and included approximately $6.7 million of planned major maintenance expense and the aforementioned $4.5 million reduction of LOE related to the federal royalty refund claim, compared to LOE of $16.6 million ($8.88 per Boe) for the quarter ended June 30, 2017.  Adjusting for third quarter actuals, including the LOE reduction related to the federal royalty recovery, we now expect our full year 2017 LOE to range from $58 million to $60 million, which includes planned major maintenance projects scheduled for the fourth quarter of 2017.

Transportation, processing, and gathering ("TP&G") expenses during the third quarter of 2017 totaled approximately $1.1 million ($0.61 per Boe).  We expect TP&G expenses to approximate $1.0 million in the fourth quarter of 2017.

Depreciation, depletion, and amortization ("DD&A") expense on oil and gas properties for the third quarter of 2017 totaled approximately $26.7 million ($15.10per Boe).  We expect DD&A to range from $14 per Boe to $16 per Boe for the fourth quarter of 2017.

Salaries, general, and administrative ("SG&A") expenses for the third quarter of 2017 were $15.9 million ($8.98per Boe), compared to SG&A expenses of $18.5 million ($9.88 per Boe) for the quarter ended June 30, 2017.  This included the previously mentioned charge of approximately $3.9 million of success-based consulting fees paid in connection with the federal royalty recovery, as well as approximately $4 million of advisory fees tied to the Board-requested strategic review.  We expect SG&A cash costs, excluding fees associated with the strategic review, to approximate $10 million to $11 million for the fourth quarter of 2017, of which we expect to capitalize approximately 17% - 18%.   We capitalized $2.6 million of SG&A expenses in the third quarter of 2017.

Incentive compensation expense for the third quarter of 2017 was approximately $4.6 million, representing the accrual of three-fourths of the estimated annual incentive following the Board's approval of the incentive and retention programs in July 2017.

Accretion expense for the third quarter of 2017 was approximately $8.1 million.  We expect accretion expense to also approximate $8 million in the fourth quarter of 2017.

Other operational expenses for the third quarter of 2017 totaled approximately $0.7 million and included approximately $0.4 million of stacking charges for the platform rig at Pompano, while awaiting demobilization. 

Net derivative expense for the third quarter of 2017 totaled approximately $6.7 million, comprised of $1.2 million of income from cash settlements and $7.9 million of non-cash expense resulting from changes in the fair value of derivative instruments.

Interest expense for the third quarter of 2017 was approximately $3.5 million, which primarily included interest associated with the Company's $225 million 7.50% Senior Second Lien Notes due 2022.  Capitalized interest was $1.2 million in the third quarter of 2017.  We expect interest expense to remain constant for the fourth quarter of 2017.

Capital Expenditures Update

Capital expenditures for the third quarter of 2017 were approximately $34 million, which included $7 million related to drilling the Rampart Deep well, before reimbursement of lease costs, $5 million associated with removal of the rig and reinstallation of the living quarters at the Pompano platform, and $20 million of plugging and abandonment expenditures.  In addition, approximately $2.6 million of SG&A expense and $1.2 million of interest expense were capitalized during the quarter ended September 30, 2017.  For the nine months ended September 30, 2017, capital expenditures totaled approximately $96 million, which included approximately $57 million of plugging and abandonment expenditures.  Capitalized SG&A and interest expenses for the nine months ended September 30, 2017 totaled approximately $7.4 million and $5.2 million, respectively.

Our Board-approved capital expenditures budget for 2017 is $181 million and includes approximately $22 million for exploration opportunities, $69 million for development activities, and $90 million for the plugging and abandonment of idle wells and platforms, and excludes capitalized SG&A and interest expenses.  We currently expect to spend less than the approved 2017 budget.

Liquidity Update

As of September 30, 2017, Stone's liquidity approximated $420.8 million, which included approximately $137.4 million of undrawn capacity under the Company's revolving credit facility plus approximately $245.7 million in cash on hand and approximately $37.7 million in cash being held in a restricted account to satisfy near-term plugging and abandonment activities.  As of November 1, 2017, Stone had cash on hand of approximately $242 million, and $38 million in cash held in the restricted abandonment account.

As of September 30, 2017, Stone's outstanding debt totaled approximately $236 million, consisting of $225 million of 7.50% Senior Second Lien Notes due 2022 and approximately $11 million outstanding under a building loan.  Further, the Company had no outstanding borrowings and outstanding letters of credit of approximately $12.6 million under its $150 million available borrowing base.  The borrowing base redetermination from the bank group is expected in early November 2017.

As of September 30, 2017, we had a current income tax receivable of $27.7 million, which we expect to collect within the next twelve months. 

We expect that cash flows from operating activities, cash on hand, and availability under our revolving credit facility will be adequate to meet the current 2017 operating and capital expenditures needs of the Company.

Strategic Review

As previously announced, following the successful completion of the Company's financial restructuring and emergence from Chapter 11 reorganization, Stone's Board of Directors (the "Board") retained Petrie Partners LLC to assist the Board in its determination of the Company's strategic direction, including assessing its various strategic alternatives.  The Board's assessment with Petrie Partners is ongoing and there can be no assurance that this assessment will result in any transaction.

Fresh Start Accounting and Hedge Accounting Changes

Upon emergence from Chapter 11 reorganization, Stone adopted fresh start accounting effective February 28, 2017.  Under the principles of fresh start accounting, a new reporting entity was created, and Stone's assets and liabilities were recorded at their fair values as of the fresh start reporting date.  Also, effective January 1, 2017, we have elected to not designate our 2017, 2018, and 2019 commodity derivative contracts as cash flow hedges for accounting purposes.  Accordingly, the net changes in the mark-to-market valuations and the monthly settlements on these derivative contracts will be recorded in earnings through derivative income/expense.  As a result, Stone's financial statements dated on or after March 1, 2017 will not be comparable with financial statements issued prior to that date.  References to "Predecessor" refer to Stone prior to the adoption of fresh start accounting while references to "Successor" refer to Stone subsequent to the adoption of fresh start accounting.  Please review Stone's Quarterly Reports on Form 10-Q for the periods ended March 31, 2017 and September 30, 2017, respectively, for further details regarding fresh start accounting and the financial information presented at the end of this press release.

Operational Update  

Mississippi Canyon 116 - Rampart Deep (Deep Water).  As previously announced, the Rampart Deep well, operated by Deep Gulf Energy III, LLC, encountered approximately 107 net vertical feet of liquids-rich natural gas pay in three primary zones, as interpreted by Stone. In addition to the reserve potential of Rampart Deep, this well also provides critical information that reduces the exploration risk of Stone's Derbio prospect.  Completion of the Rampart Deep well was deferred while the partners analyze the well data, and will be further evaluated in conjunction with future Derbio drilling results, which may impact sanctioning of the project.  Working interest partners in the Rampart Deep well are Stone with 40%, Deep Gulf Energy III, LLC with 30% and entities managed by Ridgewood Energy Corporation (including Riverstone Holdings, LLC and its portfolio company ILX Holdings III, LLC) with 30%.

Mississippi Canyon 72 - Derbio (Deep Water).  The Derbio prospect is located five miles from Stone's Pompano platform and targets the Miocene interval.  Results from the Rampart Deep well reduced the exploration risk of the Derbio prospect.  Current drilling plans for Derbio target a first half of 2018 spud date.  The well is estimated to take three months to drill, and, if successful, first production from the Rampart Deep/Derbio project is expected by late 2019 and could be a multi-well tie back to the Stone 100% owned Pompano platform.  Working interest partners in the Derbio prospect are Stone with 40%, Deep Gulf Energy III, LLC with 30% and entities managed by Ridgewood Energy Corporation (including Riverstone Holdings, LLC and its portfolio company ILX Holdings III, LLC) with 30%.

Mississippi Canyon 28 - Mt. Providence (Deep Water).  The Mt. Providence prospect is located approximately five miles from the Pompano platform and targets the Miocene interval.  We currently expect to spud the Mt. Providence development well in December 2017.  The well is estimated to take two months to drill.  If successful, the well will be tied back to the Pompano platform, with first production expected in the second quarter of 2018.  Stone holds a 100% working interest in this prospect.

Hedge Position

The following table illustrates our derivative positions for 2017, 2018, and 2019 as of November 1, 2017: 

	Collar Contracts
	Daily Volume (Bbls/d)	Put Price ($ per Bbl)	Call Price ($ per Bbl)
Mar 2017 – Dec 2017	1,000	$50.00	$56.45 Werbung Mehr Nachrichten zur Stone Energy Aktie kostenlos abonnieren E-Mail-Adresse Bitte überprüfe deine die E-Mail-Adresse. Benachrichtigungen von ARIVA.DE (Mit der Bestellung akzeptierst du die Datenschutzhinweise) -1 Vielen Dank, dass du dich für unseren Newsletter angemeldet hast. Du erhältst in Kürze eine E-Mail mit einem Aktivierungslink. Hinweis: ARIVA.DE veröffentlicht in dieser Rubrik Analysen, Kolumnen und Nachrichten aus verschiedenen Quellen. Die ARIVA.DE AG ist nicht verantwortlich für Inhalte, die erkennbar von Dritten in den „News“-Bereich dieser Webseite eingestellt worden sind, und macht sich diese nicht zu Eigen. Diese Inhalte sind insbesondere durch eine entsprechende „von“-Kennzeichnung unterhalb der Artikelüberschrift und/oder durch den Link „Um den vollständigen Artikel zu lesen, klicken Sie bitte hier.“ erkennbar; verantwortlich für diese Inhalte ist allein der genannte Dritte. Andere Nutzer interessierten sich auch für folgende News 25.05.24 - Jörg Schulte PROFITIEREN vom SILBER-BOOM: Der SILBER-STURM kommt - wie diese unterbewertete Firma die Investmentwelt aufmischt und Milliardenwerte hebt! 25.05.24 - Société Générale Discount-Zertifikat vs. Aktienanleihe – Preisabschlag sofort oder Zins zum Schluss? 25.05.24 - XTB BITCOIN am Wochende: ‚Sell the News‘ auch für Bitcoin?!